The Community Re Investment Act and the Bank Debt Crisis

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The communit of reinvestment act, which we're going to push back a little bit in li when we get to it more detail. The total amount of subsidized credit that was a contractually agreed as a quid pro quo for those activist groups to show up at the mercher hearings is almost 870 billion dollars over the period 19 92. A lot of people who blame the commune re investment act for playing a role in the two thousand aight financial crisis a get challenged by sain well. In the nineteenth century has a banking structure unlike any other country on the planet. It's very hard to move funds from one branch to another and you can't spread risk across regions.

Charles Calomiris of Columbia University and Stephen Haber of Stanford University, co-authors of Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, talk with EconTalk host Russ Roberts about their book. The conversation focuses on how politics and economics interact to give some countries such as Canada a remarkably stable financial system while others such as the United States have a much less stable system. The two authors discuss the political forces that explain the persistence of seemingly bad financial regulation. The conversation includes a discussion of the financial crisis of 2008.